EUR/GBP Fundamental Analysis – November 6, 2015 – Forecast

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Published: Nov 5, 2015, 12:48 UTC

Analysis and Recommendations: The EUR/GBP is flat at 0.7063 as the euro and the pound are finding it difficult to move against the strong US dollar and

EUR/GBP Fundamental Analysis – November 6, 2015 – Forecast

Analysis and Recommendations:

The EUR/GBP is flat at 0.7063 as the euro and the pound are finding it difficult to move against the strong US dollar and ahead of tomorrow’s jobs report in the US. German factor ordered printed on the downside, while Bank of England held rates and policy today. The pound rose as high as €1.4174 – a level not seen since mid-August and up nearly 6 per cent in the last three weeks.

The Bank left rates unchanged today but any hints that the monetary policy committee is becoming more ‘hawkish’ is likely to push the pound higher. The prospect of higher interest rates typically boosts a currency because investors are attracted by the promise of better returns.

The broad trend in UK economic news-flow has steadily improved since mid-June. A steady uptrend in revisions to economists’ forecasts is also encouraging. This would probably set the stage for BOE tightening if inflation readings were not stubbornly stuck in a 4-year down trend. Last year’s oil plunge is only half of the story however: core inflation is also worryingly low.

Beyond energy prices, the Bank has linked sluggish price growth to the impact of Sterling strength. Indeed, the UK unit has trended higher against the currencies of key trade partners, weighing on import costs. On balance, this means the BOE will probably opt for a wait-and-see posture for now, marking time until it can assess the degree to which on-coming ECB easing and Fed tightening alter FX headwinds while the oil slump drops out of year-on-year CPI calculations.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
AUD	RBA Governor Stevens Speaks
JPY	Monetary Policy Meeting Minutes
USD	FOMC Member Stanley Fischer
AUD	RBA Assist Gov Lowe Speaks
EUR	German Factory Orders (MoM) (Sep)	-1.7%	1.0%	-1.8%
GBP	Halifax House Price Index (MoM) (Oct)	1.1%	0.6%	-0.9%
GBP	Halifax House Price Index (YoY) (Oct)	9.7%	9.5%	8.6%
EUR	ECB Economic Bulletin
EUR	Retail Sales (MoM) (Sep)	-0.1%	0.2%	0.0%
EUR	ECB President Draghi Speaks
GBP	BoE QE Total (Nov)	375B	375B	375B
GBP	Interest Rate Decision (Nov)	0.50%	0.50%	0.50%
GBP	BoE Gov Carney Speaks
USD	FOMC Member Dudley Speaks

Upcoming Economic Events that you should be monitoring:

Friday, November 6, 2015

Cur.	Event	Actual	Forecast	Previous
AUD	Monetary Policy Meeting Minutes
JPY	BoJ Governor Kuroda Speaks
EUR	German Industrial Production (MoM)		0.5%	-1.2%
GBP	Halifax House Price Index (MoM)		-0.7%	-0.9%
GBP	Industrial Production (MoM) (Sep)		-0.1%	1.0%
GBP	Manufacturing Production (MoM)		0.4%	0.5%
GBP	Trade Balance (Sep)		-10.60B	-11.15B
USD	FOMC Member Bullard Speaks
USD	Average Hourly Earnings (MoM) (Oct)		0.2%	0.0%
USD	Nonfarm Payrolls (Oct)		180K	142K
USD	Private Nonfarm Payrolls (Oct)		165K	118K
USD	Unemployment Rate (Oct)		5.1%	5.1%
GBP	NIESR GDP Estimate		0.6%	0.5%
USD	Baker Hughes U.S. Rig Count			578